President Dilma Rousseff announced today the government’s plan to abolish the taxation of staple foods in Brazil in order to fight rising inflation.
Speaking to a local radio station in Paraná, Rousseff announced the latest in a series of wider tax cuts, which has already seen utility rates slashed in order to slow consumer price increases and increase competitiveness.
The government will now update the basket of goods law, which currently features 13 basic goods that are deemed essential for a Brazilian family to live off for a month. Rousseff said of the new plan that, “since the basic basket law is so old, we are updating the list of products so that we can eliminate all federal taxes on them.”
The list of 13 basic goods currently includes rice, bread, butter, and meat, whose prices rose approximately 10% in 2012. The new additions to the basket of goods law to be announced soon.
However, Rousseff noted in her interview that the tax cuts would only affect federal taxation, as attempts to convince state governments to scrap local taxes on staple foods have been unsuccessful.
The Brazilian government hopes these measures will kick-start the country’s stagnant economic growth and curb its rising inflation, which rose to 6.0% in January, exceeding the Central Bank’s target of 4.5%.
Yesterday, supermarkets in Argentina agreed to freeze prices for two months as the country attempts to tackle inflation that private estimates put at above 20%.